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7 Risks of Clark County Stadium Plan

Nevadans for the Common Good has identified 7 hidden risks in the proposed $750 million public financing plan for a new NFL stadium in Las Vegas. These risks include taxpayers being on the hook if room tax revenues are insufficient to repay bonds, the likelihood of another recession reducing those taxes before the 33-year bonds are paid off, placing repayment risk on taxpayers rather than investors by choosing general over revenue bonds, over $250 million in additional interest costs due to a 33-year bond term, limiting other public projects due to debt limits, ongoing maintenance and renovation costs, and unrealistic projections of events at the new stadium overstating economic benefits. The group argues these risks make the stadium plan a bad deal for Clark County residents

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166 views1 page

7 Risks of Clark County Stadium Plan

Nevadans for the Common Good has identified 7 hidden risks in the proposed $750 million public financing plan for a new NFL stadium in Las Vegas. These risks include taxpayers being on the hook if room tax revenues are insufficient to repay bonds, the likelihood of another recession reducing those taxes before the 33-year bonds are paid off, placing repayment risk on taxpayers rather than investors by choosing general over revenue bonds, over $250 million in additional interest costs due to a 33-year bond term, limiting other public projects due to debt limits, ongoing maintenance and renovation costs, and unrealistic projections of events at the new stadium overstating economic benefits. The group argues these risks make the stadium plan a bad deal for Clark County residents

Uploaded by

Jon Ralston
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd

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7 HIDDEN RISKS IN THE STADIUM PLAN


Nevadans for the Common Good (NCG) has studied the Stadium Plan and has concluded that this is a bad deal for taxpayers with an unacceptable level of risk for the residents of Clark County. We cannot afford to gamble $750 million of
public money on a deal that doesnt include guarantees for substantial public benefits. We have identified seven risks to
the public that havent been adequately discussed.
1. Taxpayers Bear The Risk Of A Stadium Bond Default
The stadium plan will be financed by $750 million in general obligation bonds.
This means that our taxes will be used to cover the bond payments if the room tax revenue is insufficient.
Our property taxes could be increased to pay off the stadium debt.

2. Huge Risk That Room Taxes Will Be Insufficient When The Next Recession Occurs
Room tax revenue fell by over $66 million (over 30% drop) from 2007-2009 in the recent recession.
It took 7 years for room taxes to return to their pre-recession level.
The Plan calls for 33-year bonds. What is the likelihood of another recession between now and 2050?

3. By Not Choosing Revenue Bonds, The Stadium Plan Places The Risk On Taxpayers
Revenue bonds are backed by the source of revenue, in this case it would be the room taxes. If room tax revenues

were insufficient, the people who bought the bonds would bear the risk.

By choosing general obligation bonds instead of revenue bonds, the Stadium Plan places the risk on the taxpayers

instead of the investors.

4. 33-Year Bonds Vastly Increase Cost To The Public


The cost to the public is far greater than $750 million because the bonds need to be paid back with interest. The

total cost will be over $1 billion (in present day dollars).

The stadium plan calls for a 33-year bond instead of the more standard 20- or 30-year bond.
We estimate that choosing 33-year bonds instead of 20-year bonds leads to over $250 million in additional

interest payments by the public (in present day dollars).

5. The Stadium Bonds Limit Clark Countys Ability To Invest In Other Projects
Clark County has a debt limit. Money for the stadium is money that cant be used for other projects that benefit

the public like roads, hospitals, parks, etc.

6. History Shows That A Stadium Is A Money Pit


A stadium has large maintenance and renovation costs to draw major events and keep it state-of-the-art. Football

teams threaten to leave unless cities invest more money in the stadium.

Additional money hasnt prevented obsolescence. Taxpayers have continued to pay off debt for years after the

stadium is no longer usable or has been demolished.

Removing the 39% cap on public money raises the risk that taxpayers will need to spend more for cost overruns.

7. Stadium Benefits Are Based On Unrealistic Projections


The Stadium Plan projects 46 events, but a previous study of a domed stadium for UNLV projected only 21 events.

Adding 10 NFL games still only adds up to 31 events.


Economists who have studied past examples agree that a stadium does not generate significant local economic

growth.

There are many other risks that have been mentioned such as the cost of roads, additional police, infrastructure, the possibility that the Raiders wont come, and the possibility they will leave before their lease is up. The bottom line is The
collection of any taxes which are not absolutely required, which do not beyond reasonable doubt contribute to the public
welfare, is only a species of legalized larceny. (University of Denver Sports and Entertainment Journal, Spring 2011).

9/27/2016

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